A Near Shore Healthcare BPO Summary Report - Ephor … wage requirements, detailed job level salary...

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www.ephorgroup.com 1 ©Copyright 2013 Ephor Group, LLC. All Rights Reserved.

A Near Shore

Healthcare BPO

Summary Report

The Near Term

Opportunity for

Healthcare BPO services

in Latin America

Ephor Group, LLC

An Ephor Group Review & Analysis of the Opportunity for

Healthcare Business Process Outsourcing (BPO) Functions in

LATAM

Q1 2014

http://www.ephorgroup.com/


www.ephorgroup.com ©Copyright 2014 Ephor Group, LLC. All Rights Reserved. 2

ABOUT THE AUTHOR

The Ephor Group, founded in 2002, is a strategic advisory firm exclusively missioned to provide strategic advisory

services, executive management, and financial resources to emerging and high growth oriented global Business

Process Outsourcing (BPO) companies, with specific expertise in the Healthcare Business Services sector. Since its

inception, the firm has provided economic development services and programs, economic analysis studies, labor

supply, demand and costs studies, site selection & implementation services, capital acquisition and fund raising,

coupled with significant merger & acquisition activities in Latin America (LATAM). This expertise has resulted in

approximately 1,200 new healthcare support services related job opportunities to the region in the past 5 years.

Ephor Group’s (“Ephor”) principals and professionals illustrate nearly 70

years of experience in the region including: managing and operating 8 call

centers and customer service activities for the largest bank in the region,

operating a 400 seat “captive” healthcare case management center

servicing the English speaking North American market, and has conducted

13 successful site selection processes. Ephor enjoys particular knowledge,

experience and success in providing near shore support and capabilities to

the North American healthcare delivery system. The Ephor Group Latin

American office for the past 10 years has been located in Panama City,

Republic of Panama.

Our Managing Partner, Garry Meier, is a well-known and respected

thought leader and speaker on the global outsourcing sector, having

served as President & COO of Medaphis Physician Services (MEDA), a

publicly traded outsourcing provider of healthcare business services that

grew to nearly $650M in revenue. Garry also served as Chairman & CEO of

Outsource International (OSIX), a publicly traded $850M revenue provider

of global BPO services with locations in 23 countries. Currently Mr. Meier

is the Chairman of Latin American Card Services (LACS), a high growth

provider of outsourced financial services, with locations in 10 LATAM

countries.

Currently Mr. Meier’s focuses his time on advising Boards of Directors, CEOs and Investors on their global growth

initiatives. Of particular note, Mr. Meier is a resident of the country of Colombia, and speaks English and Spanish.

Ephor trusts the enclosed summary overview of the tremendous opportunity for BPO services prevalent in Latin

America provides the required summary information and promotes a thought process which provides significant

consideration of Latin America as a location for your organization’s growth and expansion.

Founded in 2002

Significant Healthcare

Services & RCM

Expertise

13 Site Selection Projects

in LATAM

5,500 LATAM Jobs Created

Strategic Advisory

Services

Operational Expertise in 23

Countries

LATAM Office in Panama

Ephor Group




METHODOLOGY

Central and South America have been making global news headlines recently due to the

economic growth and opportunity that continues to present itself in this area of the global

economy. Most of the nations in Latin America (LATAM) have finally and very recently left their

checkered pasts and reputations as narcotics and gun trade routes behind, while over the past

5-7 years they have done a very effective and efficient job of creating political stability and

economic growth. North American companies have taken notice of this accelerating opportunity,

as illustrated by the fact that the region has become a receptacle of some 120 new BPO

facilities comprising approximately $350M in foreign investment in the past 2 years alone.

Even with these impressive growth statistics, Ephor Group has determined the total

capacity utilization of BPOs in LATAM is in the lower 25% quartile, while the English

speaking capacity utilization is even less across all BPO sectors.

Throughout 2012 and 2013 Ephor Group conducted significant primary research and on-site

evaluations of the country, locales and major metropolitan areas within the region, specifically

for healthcare support services for the North American healthcare delivery marketplace.

Healthcare Support BPO Markets in LATAM




As a result this market research was consolidated into a comprehensive report in early 2014.

For quality and comprehensiveness this data and the findings are cross-referenced from

secondary and tertiary sources, coupled with onsite evaluation and interviews with business,

political and economic development professionals. Each data point is amalgamated from a

minimum of three sources. In some cases, data is confirmed from as many as seven sources.

The information and findings presented in this healthcare briefing document is a summation of

a larger report of the LATAM BPO market, its capabilities and opportunities for the region for

the healthcare sector and beyond. The information was compiled in concert with the Ephor

client base along with a network of operational executives and thought leaders from the region,

and subsequently combined with the aforementioned data accumulated throughout 2012-2013.

Specifically, the research report encompasses

macroeconomic factors such as economic drivers and

includes, in part, information surrounding the economic

health of the countries and cities of study. This economic

health was evaluated via an analysis of such factors as GDP

sizing and GDP growth rates (including Healthcare as a

percentage of GDP) inclusive of a ranking among countries,

trade surpluses including Balance of Payments analysis,

foreign direct investment dollars and rules, corruption

indexes, currency influx, currency flight and currency

exchange risk. Further elements of the report contain

political attributes of each candidate country and “general

findings” in terms of relations and foreign direct investment

views of incumbent government administrations.

As with any BPO site selection process, an evaluation of labor supply, cost, and utilization is

critical. Therefore, the “Data Library” and summary report includes all salient labor data and

information, including specific healthcare clinical and support job positions and descriptions (i.e.

English speaking nursing and clinical care professionals), supply and demand analysis,

minimum wage requirements, detailed job level salary information coupled with information

Belize

Colombia

Costa Rica

Dominican Republic

Ecuador

El Salvador

Guatemala

Honduras

Jamaica

Mexico

Panama

Peru

LATAM Countries of Study




surrounding employer burdens, payroll-related taxes, incentive pay, number of national and

local holidays, standard vacation and maternity leave benchmarks. This information is provided

at both the country and local levels.

The report also includes an analysis of “How does a

healthcare-oriented BPO operator and investor

develop the Human Capital Supply Chain necessary

to scale & grow?” specific for healthcare knowledgeable

workers, such as recruiting, staffing and training.

Infrastructure elements are understood within each locale,

including job boards, country level and local level

government assistance training programs, related career

service data, staffing and recruiting organizations and

commercial training institutions and their capabilities,

along with all bi-lingual training entities.

In general the report provides a significant level of

guidance and directional data and information which

enables any healthcare BPO or healthcare clinical support

organization to narrow its geographic search for the most

optimal location to expand its operational asset base in

LATAM.

Understanding specific

skill requirements

Labor costs of those

requirements

Labor supply of the specific

skill requirements

How to recruit, train &

onboard those specific skills

Human Capital Supply

Chain is Critical

Healthcare BPO Labor Success Factors




Proximity to US

Same Time Zones to US

Greater “Hands-On”

Logistics Savings

Culture fit to US

Capable Infrastructure

Labor Cost Advantages

Economic Stability

Tax Incentives

Increasing Supply of

Nursing & Clinical

Professionals

English Speaking Ability

Academic Support

Significant Capacity for

Growth

LATAM Advantage

OVERVIEW

As the economic growth and political stability continues to proliferate in the region, countries

and local governments are creating programs to attract direct foreign investment, accelerate

the attractiveness of market dynamics, and create an environment of assistance and support

for the entire BPO sector. Each country and city identified in the report contained a

designated BPO initiative as an economic development venue and job creator. Ephor

emphatically states that LATAM indeed offers many strategic, geographic and economic

advantages to healthcare BPO participants.

The BPO market opportunity in LATAM is no longer a

closely-held secret among the most sophisticated (and

largest) BPO providers. While the market is still on the

early-adoption side of the curve, Ephor suggests this

window of opportunity is narrowing. As larger BPO and

“captive” centers are early adopters in the region, mid-size

and even a few smaller firms have begun to follow suit,

taking full advantage of the many favorable aspects of

locating its business processes to a near shore environment.

Ephor suggests this trend in the very near term (2-3 years)

will accelerate, especially when one considers that many

US-based BPO firms will need to escape the hostile small to

medium size business burdens embarked on them by the

current Administration, and specifically healthcare reform

initiatives such as the Affordable Care Act (ACA).




LOCATION FINDINGS

There are many key considerations for growth-oriented healthcare-oriented BPO organizations

looking to conduct site and expansion analysis within the region. First, LATAM is within close

proximity to the US, and falls within the same time zones. Even for European firms, the LATAM

market is closer than India, Malaysia and other traditional locations for outsourcing.

From the US, operational executives have found that they can have a more hands-on approach

to LATAM operations, thanks to this proximity. Managers can, in certain circumstances, fly in

and out within the same day or two days, minimizing time lost due to travel and logistics.

Similar time zones to the US mean that employees in

LATAM operational centers can continue a normal life

and a regular working day similar to US counterparts,

therefore creating significant operational synergies

versus other, very distant BPO clusters. Cost savings

in terms of flights and personal transportation in and

of itself creates a compelling cost avoidance attribute

to consider.

LATAM countries and locales, especially over the past 3-4 years have invested heavily in

infrastructure as part of a larger package of “positive considerations” to attract foreign

investment. This has resulted in modern telecommunications capabilities and power reliability

on par with the United States and Europe. Foreign operators utilizing BPO centers can now

expect (and forecast) that any downtime due to infrastructure reliability is similar to what they

should expect in domestic power markets. Added to this are the greater macroeconomic factors

(GDP growth, currency exchange rationalization, e.g.) that are putting these nations on the path

for growth and greater stability.

Of significant consideration is the culture in most LATAM nations, which is far closer

in characteristics and affinity to the United States than nations from afar.

Cost effective travel vs. other

BPO markets

Greater workforce & cultural

synergies between North

American locations

Similar time zones to US

Geographic Advantage




~20 million workers in

LATAM speak English

Significant language

training capacity

ESL is rapidly becoming

an education standard

English Advantage

Ephor, on numerous occasions has taken clients or investors to locations within the region to

show them that, in many aspects, one feels right at home in these cities. Often one may not

know if one is in Sacramento or Medellin, Miami or Panama, Colorado Springs or San Pedro

Sula. This familiarity only helps the BPO organization provide better and more culturally

aligned services to US firms.

Along with infrastructure improvements, many LATAM nations now provide very attractive tax

incentives and “free zones” for foreign operators considering creating a LATAM operational

facility. Those incentives are varied and numerous, each individually focused on solving specific

needs of each country. Ephor suggests that in the near future the environment for incentives

will only become more prevalent for foreign investors.

Lastly, the report substantiates the supply and quality

of competent English-speaking skills with healthcare

clinical and RCM capabilities is salient and growing.

The LATAM market consists primarily of Spanish speaking

populations with English as a second language (ESL). ESL

in many geographies has become a requirement for a

college level degree and in many of the secondary schools,

especially in the larger countries, ESL is becoming a

graduation standard. Of further note, a majority of the

private educational institutions require approximately 5

years of English study as a graduation requirement.

Students are increasingly aware of the advantages of

having English language skills as a tool for career growth;

the region provides a compelling location for English-to-

English services to the global economy.

Therefore, Ephor asserts that the current supply, training capacity and ESL focus

within the identified geographies, will provide an adequate and growing supply of




English language capability to satisfy the long term needs of the healthcare-focused

BPO sector in LATAM.

English Speaking Percent of Population

The report provides specific and detailed labor supply and compensation analysis of the

healthcare clinical skills, including doctors, nurses, nurse practitioners, nurses’ assistants,

emergency medicine personnel and medical technicians. Additionally, the report provides

specific labor supply, cost and training analysis of certain healthcare business services

positions, including billing, coding, receivables management, and financial accounting

outsourcing (FAO) positions within each country and locale of study. Ephor concludes that

the labor & skill supply for Healthcare BPO oriented skill requirements in LATAM is at

best in the lower 25th quartile of utilization. Therefore, a significant opportunity

exists for the Healthcare BPO sector to expand and prosper in LATAM.

Recent activity in the region supports the findings of the report, as several large US firms have

moved into various LATAM countries to fill their capability and capacity-oriented needs. Best

Buy, for example, has many of its IT functions located in the region, taking advantage of local

expertise and labor economics. TelePerformance, Sutherland Global, Allied Global, and

“branded captives” such as HP, Google and Microsoft are a few of the many companies that

have moved some of their operations to this favorable region. Additionally, many aggressive

and knowledgeable mid-sized, business-based BPOs in North American are already taking

advantage of the opportunities present in LATAM.




Significant investment in infrastructure

& communications over the past 5

years

99.999% Reliability

Underutilized capacity

Significant lower cost compared to

other BPO markets

Infrastructure Advantage

Table A: Near Shore Operational Capabilities, BPO Function Analysis

Operational Function Belize Colombia

Costa Rica Ecuador Honduras Mexico Panama

Healthcare

Outsourcing M H M H H M H

Transaction-based BPO L M M M M L M

Live Voice BPO H H M M H H H

Customer Services H H H M H H H H=High, M=Medium, L=Low Capability Level

In addition to general BPO site consideration information contained within the report, Ephor has

recently completed a labor supply cost and utilization report of English proficiency specific to

healthcare BPO market requirements. Ephor suggests that this report and their site

implementation expertise further emphasize the critical need to include the development of a

“proprietary human capital supply chain in all planning.” It is important to understand the size

of the population applicable to the specific operational needs, their specific skill requirements

and proficiency needs, as well as a thorough understanding of the cost attributes of

implementing and operating in LATAM.

Table B: Summary Labor Statistics

Service Sector Population

Unemployment Rate

Minimum Wage

Average Employer Labor Burden

LATAM 29% of total LATAM population

7.9% 24.6% of US Federal Min.

Wage

44.2%

A BPO Center in Monterrey




Additionally, and of critical importance, the report provides an example of the many relevant

financial considerations surrounding a near shore healthcare BPO implementation, which are

combined and compared (through a comparison analytical model over a five year timeframe) to

domestic US costs to determine the overall financial synergies and ROI on the start-up and

implementation investments. This multiyear model provides the management information and

financial guidance on the project and implementation planning needs.

Table C: Healthcare RCM Function Cost Comparison

Savings Year 1 Savings Year 2

Colombia

% of US Cost: 56.7% 63.7%

Mexico

% of US Cost: 61.8% 67.3%

Ecuador

% of US Cost: 43.2% 52.6%

Panama

% of US Cost: 28.3% 38.8%

In conclusion, Ephor trusts this summary report illustrates the tremendous opportunity for

Healthcare BPO operational capacity in Latin America and provides the required summary

information that promotes LATAM as a location for your organization’s growth and expansion.

Please contact Ephor Group at 214.702.6427 or [email protected] for further information and discussions relating to:

Strategic & strategy analysis of your business

BPO sector analysis & forecast Comprehensive LATAM report review & analysis

Overview of Ephor’s site selection & implementation process

Up to 55% Wage Savings

Up to 52% Total Labor Cost

Savings

Up to 65% Total Operating

Cost Savings

Cost Advantage




TABLE OF CONTENTS

ABOUT THE AUTHOR

METHODOLOGY

OVERVIEW

LOCATION FINDINGS TABLE A: Near Shore Operational Capabilities

TABLE B: Summary Labor Statistics TABLE C: Healthcare RCM Function Cost Comparison

CredentialingMedical Data Entry

Charge CapturePayment Posting

Denial ManagementAR Follow Up

Credit BalanceResolution

Reporting

Analysis

Trending

OutcomeManagement

Patient Call CenterPatient Enrollment

Eligibility VerificationPre-Authorization &

CertificationCare/Case Management

& Follow Up

ICD-10 Transition

Medical Coding

Coding Audits

Clinical Documentation Improvement (CDI)

Compliance Support

RCM

HIM

Solutions

Patient Billing

Solutions

Provider & Insurance

Billing

Solutions

Analytics

Technology Solutions &

Support

Healthcare Near Shore Support Functions

Level I & II SupportImplementation Support




Selected Data Library Contents

Table Description Importance

English Speaking

Capability Summary

Overview of English

speaking population, its size

in the service sector, and

the overall English skill level

of each population

This information is used to identify the

best location for the specific English skill

level required for your BPO operational

needs.

Near Shore Operational

Capabilities Analysis

Overview of the level of

capability, by location, of

each major outsourcing

process

This information is used to identify the

most appropriate location to implement

an operational center for your specific

business process outsourcing needs.

Labor Salary

Comparison & Analysis

Overview of the labor

markets, its makeup, size

and critical factors

influencing each

This information is leveraged to identify

those markets which contain the most

labor synergies, the “hungriest”

population for jobs, and the employer

burdens associated with each position.

Operating Cost

Comparison & Analysis

Comparison and summation

of critical cost factors, by

country and city, and the

savings compared to US

costs

This information compiles the most

critical factors affecting cost synergies in

LATAM markets and provides a

comparison of cost savings based upon

US equivalent costs.

Logistics Data

Data table of flight durations

from key US travel hubs,

approximate flight costs,

total travel time, major

cities and airport codes

This information allows for reasonable

comparisons of travel costs and time

across the LATAM region. Results can be

weighted to your priorities, or used to

calculate cost per hour for your

managers to reach near shore BPO

centers.

Socioeconomic Analysis

Overview of the political,

economic and social factors

affecting each population

and labor market

This macro-level information allows for a

detailed review of the factors that will

influence your operating center in

LATAM. Government, legal system, visa

requirements and GDP comparables are

provided to determine the most

economically stable business climate for

your operating activities.

Foreign Exchange

Analysis

Overview of current and

historical exchange rate

information and Balance of

Payment data

This information is invaluable in

determining the power of your CapEx

dollar in a near shore location. Balance of

Payment information provides further

insight into the countries’ economic

stability, capital flight risks and deficits.




For a no obligation overview discussion with one of our Partners, contact


[email protected] 713.977.3600

24 E. Greenway Plaza, Ste. 400 Houston, TX 77046

www.ephorgroup.com

What Should My Growth Strategy Include & Why?


mailto:[email protected]




For a pragmatic, no obligation site selection overview and

discussion, contact


[email protected]

713.977.3600


www.ephorgroup.com

How & Where

Should I Expand My Healthcare

BPO Capabilities?






When considering site selection for a near shore BPO, this is what

you need to know:

Macroeconomic Factors Currency Exchange Factors

Workforce Competencies Local Government Initiatives

Local Tax Rules & Implications Human Capital Supply Professional Development Support

Local Catalysts for Success Workforce & Workplace Safety

Socioeconomic Factors Logistics

Political Climate Workforce Culture

Labor Rules Office Space Markets Payroll Factors

Microeconomic Factors Job Boards & Hiring Agencies

For a detailed review of your requirements, contact


[email protected]

713.977.3600


www.ephorgroup.com

What Do I Need

To Know To

Expand & Why?






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contents in the document are protected by copyright and no part or parts hereof may be modified, reproduced, stored in a retrieval

system, transmitted (in any form or by any means), copied, distributed, published, displayed, broadcasted, hyperlinked, used for

creating derivative works or used in any other way for commercial or public purposes without the prior written consent of Ephor.

Use of Information The contents of this document are provided to you for general information only and should not be used as a recommendation or

basis for making any specific investment, business or commercial decision. These pages should not be construed as a

recommendation, an offer or solicitation for the subscription, purchase or sale of the securities, and specifically funds or any

investment products, mentioned herein, or, in any jurisdiction to any person to whom it is unlawful to make such an invitation or

solicitation in such jurisdiction. Accordingly, no warranty whatsoever is given and no liability whatsoever is accepted for any loss

arising whether directly or indirectly as a result of you acting based on this information. All Limited Partner commitments must be

made via fund subscription agreements. You should read the subscription agreements before deciding to subscribe for units in the

respective fund. A copy of the agreements can be obtained from Ephor. Investments are subject to investment risks including the

possible loss of the principal amount invested. The value of the units in any fund and the income from them may fall as well as rise.

If the investment is denominated in a foreign currency, factors including but not limited to changes in exchange rates may have an

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The contents of this document, including these terms and conditions, are subject to change and may be modified, deleted or

replaced from time to time and at any time at the sole and absolute discretion of Ephor.

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